'Creating an anchor' investing strategy

Here's an investing strategy for emerging markets that claims it will generate 75% of a 'fully invested' strategy, but with half the volatility.

Emerging markets investors worried about a pullback can do what Bob Phillips, a managing partner at Spectrum Management Group in Indianapolis, calls "creating an anchor." That means taking 50% of the money you've earmarked for emerging markets and putting it into cash. The other half goes into an emerging-market index fund or exchange-traded fund. Every month the allocation should be rebalanced back to a 50-50 split. Over time, Phillips says, that strategy has produced 75% of the returns with half the volatility.

Read the full article for ideas on an alternative to the 50% cash portion of the allocation.

I did a quick search on 'creating an anchor investment strategy', '50 50 investment plan', '50-50 reallocation' and a few other terms. Unfortunately, I couldn't find any other published data on this strategy.

Startup Investing

It's not easy to invest in startups, at least not the ones that you would like to invest in (i.e., non-shady ones with a chance of generating big returns). Startup investing is for the stouthearted. But even if an individual has the stomach, she might find her money not wanted due to competition from larger investors. BusinessWeek offered some tips to get in on early stage companies, if you're so inclined.

1. Do you qualify as an "accredited investor" under the current SEC definition?

2. Do you have reliable information about the company's finances?

3. Can you gain entrée through personal connections to the company, its existing investors, or its board? Do you work in the same field as the company, which could make you a more attractive investor?

4. Have current shareholders listed to sell on one of the secondary market platforms?

One of the hurdles for a mass affluent investor to overcome is the requirement to be an accredited investor.

a natural person who has individual net worth, or joint net worth with the person’s spouse, that exceeds $1 million at the time of the purchase;

a natural person with income exceeding $200,000 in each of the two most recent years or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year;

The accredited investor rule comes straight from the Securities Act of 1933. From what I can tell, the dollar amounts haven't been adjusted since 1982.

One of the illiquid securities exchanges mentioned in the article, SharesPost, promotes having access to sellers of Facebook shares. You don't necessarily have to be a Russian billionaire to buy into the Facebook party.

College endowments take a big hit

As expected, college endowments had a bad (fiscal) year (most just ended June 30). Interestingly, it was the smaller college endowments that did better (or less bad). (free WSJ Digg link) The median decline for small endowments was 16%, for medium was 20% and for large was 25-30%. The blame for the underperformance in 2008 is laid at the feet of the alternative investments that the big endowments have favored.

The so-called Yale approach espoused that endowments -- as long-term investors unconcerned about redemptions or short-term market fluctuations -- were the ideal candidates for alternatives. Yet in 2008, many of these assets became hard to sell, forcing schools to either dump their best-performing securities or funds, or borrow money, to meet their obligations.

Ivy League schools, more reliant on investment gains to fund daily operations, also suffered more from these drops. The average college relies on its endowment for 5% of its operating revenue, while at Ivy League schools the number ranges from 25% to 45%. That caused the type of asset-liability mismatch that has long bedeviled financial firms.

Yale does not plan to change its investment philosphy because of one bad year. And prior to 2008, for 20 years Yale averaged a 15.9% return on its endowment.

Corner the frozen concentrated orange juice market

Commodities trading is so 1983. The game these days is farmland. If you believe this, you're in good company along with George Soros, a Rothschild and Jim Rogers.

The fundamentals remain in place for a long-term boom in the prices of everything ag-related. The simplest metric to consider is the amount of farmland per person worldwide: In 1960 there were 1.1 acres of arable farmland per capita globally, according to data from the United Nations. By 2000 that had fallen to 0.6 acre (see chart above, "Precious Acres"). And over the next 40 years the population of the world is projected to grow from 6 billion to 9 billion.

Other forces conspiring to push up the cost of farmland is water scarcity, improving diets in developing countries and climate change, which will raise sea levels and cause more droughts.

Direct farmland investment seems quite difficult. Who among us has the time or skills to understand agriculture and negotiate deals? It's mostly large funds buying up the farmland, and these funds have too high minimum investments for the mass affluent. Fortunately, there is a company called Chess Ag Full Harvest Partners that is trying to become the first farmland-only REIT (Real Estate Investment Trust) in the United States. It's run by a former Nebraskan who was managing a grain elevator at 14 and did stints as a commodities trader and a hedge fund executive. It also seeks to avoid country risk.

her strategy is strictly focused on the U.S. "Yeah, land might be cheap and plentiful in Russia, but if the price of wheat goes up, is your deed going to be honored?" she says by way of explanation. Rather than buy farms in what she calls the "Prada handbag" states of Illinois and Iowa, where land comes at premium prices, she concentrates on less-well-known farming areas. In addition to her home base in Clarksdale, she has an office in South Dakota, and so far the fund has bought land in Arkansas, Kansas, Missouri, and Texas as well as Mississippi.

Hedge fund fees take a haircut

The sacrosanct "2 and 20" fee system at hedge funds may be coming to an end. Hedge fund investors are tired of paying big fees for poor performance.

In recent months some of the biggest institutional investors, including the $175 billion California Public Employees' Retirement System, have gathered at closed-door meetings in New York and Toronto to talk about ways they might flex their newfound muscle. A number of public pensions, such as the $16 billion Utah Retirement System, have pushed firms publicly to ease terms. "This is top of mind for investors," says John-Austin Saviano at Cambridge Associates, a consultant to major investors.

In this market, other investment options are available to the hedge fund investors that haven't been there before.

Private equity and hedge fund managers would prefer the status quo but fear losing big investors, who finally have other options. Instead of plowing money into new funds, for example, investors can buy into an existing portfolio cheaply on the secondary market: Some private equity funds are trading at a 50% discount. There's also the worry that the biggest pension funds will open their own hedge fund and private equity operations. That's making it difficult for money managers to get more assets without giving in to investors. Says one private equity manager: The fund-raising environment is "brutal, just brutal."

While this news affects few individual investors directly, it affects many individuals indirectly whose pension funds might be investing in hedge funds. No longer will their pension funds be paying fees for bad performance and having one fifth of the gains kept by the hedge fund manager.

John Bogle on fixing our retirement system

I'm not a Boglehead, but I vacillate between thinking that no one can beat the market (and so you should put all your money in index funds) and thinking that there are star fund managers who of course can beat the market (and so you should invest in actively managed funds). It all depends on which of my funds is doing better at that particular time, I guess. I have taken an interest in Jack Bogle's ideas to fix our retirement system (I leave it up to the reader to decide if the system is broken and needs fixing).

The financial system, he charges, is too far skewed toward Wall Street and money management firms. At the same time, he says, individual investors have far too much freedom to make ruinous decisions with their retirement accounts.

So how would he fix things? Bogle proposes the creation of a federal retirement board to simplify and clarify the retirement-savings process. The board would oversee a new kind of defined-contribution account to replace the salad bowl of options—401(k), IRA, Roth IRA, Roth 401(k), 403(b)—that currently confront and confound investors. It would also monitor savers' investment choices to help them determine just how much risk they can tolerate and would emphasize low-fee mutual funds over pricier ones. Just as important, Bogle is urging Washington to require retirement plan providers—and all money managers, for that matter—to meet basic client protection standards. He wants fuller and clearer disclosures of all potential conflicts of interest and any other information that might affect investing decisions.

What I like about this: I agree that fees are too high and some of our retirement system is designed to enrich the fund managers. There is way too little accountability for poor performance from the fund managers.

What I don't like about this: I may be reading this wrong, but it seems like this proposed federal board would determine what we could invest our retirement funds in. I worry that the choices would be so conservative that it would be impossible to get the returns needed for a nice retirement. I don't mind someone overseeing investment suitability and pointing out investment risks, but it should be up to the individual to say if he or she wants to take those risks to get bigger rewards.

Sadly, the article says that Mr. Bogle has failing health. More of his investing philosophies can be found here.

State of the state of the collectible car market

I'm not a real car buff (wouldn't even be able to change the oil in my car), but I do have this fantasy about owning a classic American muscle car. So, I followed with some interest the Arizona auto auctions that recently took place, and found they were far from disasters.

What are the Arizona auto auctions?

First, a little background. Barrett-Jackson, Russo and Steele, Gooding & Co. and RM are four automobile auction houses that each run their own auction in January in the Phoenix/Scotsdale area. Barrett-Jackson's auction seems to be the biggest in terms of dollar sales made. Their auction is also the only one not to set reserve prices. Russo and Steele was founded by a former Barrett-Jackson employee. Gooding is relatively new to the Arizona auctions, but was the only one of the four to have a sales increase this year. RM is the leader at the high end of the market. The auctions attract an over 55 moneyed crowd.

This year's auctions results

From the Barron's article:

At the auctions, the top prices generally were fetched by prewar U.S. and European classics; the bottom, by 1960s American muscle cars without adequate provenance. Entry-level cars priced at less than $100,000 -- veteran collectors call them "drivers" -- did well, especially with first-time buyers. Among sports cars, vintage Ferraris did fine. Newer ones didn't.

Overall, prices are below the high-water marks of the past two years. But the bulls contend the 20%-to-30% drops simply reflect the cooling-off of an overheated market, rather than a long-term slump like those that have devastated stocks and home prices.

I like to see that the muscle cars I want to buy are coming down in price. Good for me, but bad for the sellers

The Times take on things:

Given the economic circumstances, there was great interest in cars priced under $100,000 that would also serve as summer weekend drivers. Cars that are easy to find parts for, and eligible for events like vintage rallies and tours, did well.

Do you remember hearing about GM selling some of its historic car collection to raise capital? Well, they used these Arizona auctions too, although the articles imply the reasons for the sale were not for GM to raise capital.

One of the notable aspects of the Barrett-Jackson sale was the sale of 214 cars from the General Motors Heritage Collection. Most were prototypes or concept cars and included the striking 1996 Buick Blackhawk. Built to celebrate Buick’s 100th anniversary in 2003, it recalled the granddaddy of all design studies, the striking 1938 Buick Y-Job; the Blackhawk sold for $522,500.

Nearly all the cars in the G.M. offering were sold on either a bill of sale or a scrap title, according to Barrett-Jackson. The former, Mr. Jackson said, can never be legally registered for road use. Fortunately, the Blackhawk was sold on a scrap title so it can be registered and driven on public roads. It would be a shame for it to spend its life behind a velvet rope.

(This bill of sale vs. scrap title bears further research. I spent a few minutes on Google to little avail. Comments on what this are welcome.)

The car auction houses

Name	URL	Other Auctions
Barrett-Jackson	www.barrett-jackson.com	Florida in April and Las Vegas in October
Russo and Steele	www.russoandsteele.com	Florida and California
Gooding & Co	www.goodingco.com	California in August
RM	www.rmauctions.com	Numerous. Check out www.rmauctions.com/Directions.cfm for more details.

And you thought 100 year bonds had a long duration

Disney and Coca Cola issued 100 year bonds about 15 years ago, and made headlines (at least in the financial world) doing it. But those are nothing compared to some New York City bonds with nearly 300 year maturities.

Next month, one of the bonds, issued in 1868 and thought to be one of the oldest active municipal bonds in the country, will come due. And the city stands ready to retire the debt incurred when Winston Churchill’s grandfather came up with the idea of building a road to one of the nation’s first racetracks, which he had opened in what is now the Bronx.

For 135 years, New York City has been dutifully paying 7 percent annual interest on the bonds, which financed construction of the road. On March 1, the owner of one of them is entitled to come forward and collect its face value: $1,000.

The 38 other bondholders have notes that will mature sometime between now and 2147, a mere 138 years away.

A 7% yield for basically your lifetime, and probably your great-grandkids lifetimes sounds like a pretty good deal now. And municipal bonds are tax free too.

What would possess a municipality to issue bonds of this duration?

West Farms, where the track was, and Morrisania, which would share the road, could not afford the improvement. So the towns issued bonds, backed by Mr. Jerome, with unusually long maturities, gambling that their rapidly expanding neighbor would soon absorb them, and their debt.

“Everybody knew because of the shift of population northward, it was only a matter of time before the City of New York was going to annex the territory,” Mr. Ultan said. “So they issued these bonds with the date of redemption so far in the future because they figured that once the City of New York annexed their town, then the City of New York would assume the payment of the bonds — which is exactly what happened.”

Waiter, there's an annuity in my 401(k)

Guaranteed income during your retirement. That would certainly set your mind at ease. How do you get a guaranteed income? Social Security? Ummm, errr. A company pension? Sadly, those are a relic of the time of Don Draper. A relatively new and untested option, 'hybrid 401(k)s', may be able to provide the guaranteed income you're looking for.

A dozen or so asset managers and insurers, including AllianceBernstein, AXA, Barclays Global Investors, John Hancock, MetLife, and Prudential, are designing a new breed of retirement instrument that combines elements of pensions and 401(k)s. These products—call them hybrid 401(k)s—have begun slowly rolling out. And while they differ in structure, all combine annuities—essentially, insurance contracts that provide periodic income payments—with an investment portfolio. The hybrids won't protect investors from violent market swings. But they'll guarantee a certain amount of monthly income for the rest of your life.

[...]

The structure BGI's finance wonks came up with embeds fixed deferred-income annuities (which provide a set amount of monthly income in retirement) into a target-date fund. A 401(k) participant who chooses SponsorMatch—or whose employer uses it for the matching contributions—would have part of each contributed dollar invested in the annuities and part in the investment portfolio. Essentially, the annuities replace the bonds that would normally be in your portfolio (emphasis mine). If you're in your twenties or thirties, you'd have only a small portion in annuities; but as you age, that portion increases. As with a regular target-date fund, BGI would make those changes for you. Your investment portfolio, comprised of index-based investments, would also be automatically managed for you based on your age. You would simply pick SponsorMatch and sit back. When you received your 401(k) statement, you'd see two pieces: the amount of monthly income you'd have in retirement and the value of your investment portfolio.

Why do we need yet another asset type to put in a 401(k)? A BGI executive makes the argument that 401(k)s weren't meant to be the primary way of saving for retirement. 401(k) investors have historically underperformed institutional investors by 2% a year. There is also the problem of outliving your retirement money. These hybrid 401(k)s promise guaranteed lifetime income (for a price), and are designed to be more like pensions than traditional 401(k)s.

What's wrong with plain old target-date funds?

You might think that current target-date funds would be set up to provide lifetime income, obviating the need for an annuity in the fund. As it turns out, even those funds with the closest target date suffered bad losses in the recent market downturn, impairing their ability to provide income. The reason for this impairment was a heavy stock allocation in those target-date funds.

Fidelity Freedom 2010, which is down 21% year to date, had about 49% of its assets in stocks as of Aug. 31 (these are 2008 dates), according to Morningstar. Vanguard Target Retirement 2010, down 19% this year, had 54% in stocks as of June 30. T. Rowe Price Retirement 2010, down 23% year to date, had about 59% in stocks at June 30.

In fairness, and as one of the fund representatives mentions in the linked story, some of these funds are planning for people with 40 year retirements, which would require a heavier allocation of stocks than bonds in order to make the money last that long. But at first glance I would have expected a 2010 target-date fund to have a much higher bond allocation.

Can we become annuity fans?

Given the fact that the target-date funds hold a high allocation of equities, and the risk of the markets tanking like they've done over the last year, annuities may be a workable solution to the lifetime income problem. Now, I'll come right out and say that I have a bias against annuities. One of the articles addresses this directly:

Academic research has long shown that retirees need monthly income and that annuities make sense in theory, but people don't like them—often for good reason. Many retail annuities sold to retirees are too complicated, too expensive, and too restrictive.

The annuities in the hybrid 401(k) mostly avoid these issues. The fees are only 50 basis points, and there are no fees to cash out. But I have seen nothing about how the hybrid 501(k) will mitigate the insolvency risk of the insurer that is issuing the annuity. In these times, I worry about insurers going belly up and being unable to pay an income stream. Regular 401(k) funds hold stocks and bonds. Short of massive fraud, even if your fund company goes belly up, the stocks and bonds in the fund should still be there. When an insurance company goes belly up, I worry that there might not be anything there with which to pay your annuity.

Enter your state's life and health insurance guaranty association. Each state has a guaranty association that will backstop insolvent insurance companies. There is a Web site, http://www.nolhga.com/, with information about state guaranty associations. For example, in my state of New York, the Life Insurance Company Guaranty Corporation of New York, will only protect up to $500,000 of annuity contracts. I would like to hear more about how the annuities in the hybrid 401(k)s would be insured.

Finally, and off on a bit of a tangent, contrast the insurance guaranty association's annuity protection with that offered by the Pension Benefit Guaranty Corporation (PBGC), which guarantees failed company pension plans. In 2009, the maximum monthly guaranty (with no survivor benefits) for a 65 year old is $4,500. The PBGC monthly guarantee equates to a return of over 10% a year on $500,000, and it's risk free since it's guaranteed by the PBGC.

Where have all the cowboys stock analysts gone?

There are fewer employed stock analysts, their ranks having been decimated by layoffs as a result of subprime losses and mergers. This leads to less research available to individuals, since their brokers are less likely to now cover as many stocks. (Whether or not fewer analyst reports is a good or bad thing is something we can debate at another time.) What are some other options if your favorite coverage is no longer available? BusinessWeek has provided some options.

Research Edge is a boutique research firm that provides recommendations for $2700 a year, or $225 a month. From looking at the sample on their Web site, it appears they provide daily big picture market strategies and individual stock or ETF recommendations. Their CEO is a former managing director at The Carlyle Group, so he's a heavy hitter.

Footnoted.org has a premium section that contains more of the insights they pull from SEC filings. As they say - "For the past 5 years, Footnoted has been digging through SEC filings to bring the most interesting tidbits to our readers. But because we look at many more filings than we post on the site, we’ve decided to launch a separate product: FootnotedPro."

The most notable one of all is of course Morningstar. According to the article:

The Chicago firm started out providing reports on mutual funds, but since 2005 it has been steadily adding product categories. Currently, for an annual fee of $159, subscribers can read regularly updated reports from 200 analysts on 2,000 stocks and get access to fairly involved screening tools for finding stock or fund bargains.

The story mentions a couple more possibilities, so if you're in the market for equity research, check it out.

Where the returns were in 2008

Are you looking for where the investment returns were in 2008? Look no further, they were in managed futures funds.

[...] boon for managed futures funds, which climbed more than 13% last year. Hedge funds, by comparison, were off around 21%.

What are managed futures funds?

Managed futures are different from long/short funds and natural resource sector mutual funds. Managed future funds trade futures contracts and other derivatives. This allows them to take long and short positions. They use futures to make bets on oil and other commodities, as well as stocks and bonds. They tend to do well in markets with a lot of volatility, which we had in abundance last year (and still have now), and not as well in low volatility markets:

In 2005 and 2006, when stocks were steadily rising, the Chicago Board Options Exchange Volatility Index—the infamous VIX "fear index" that measures whether fluctuations in equities are weak or wild—dipped to a low of around 10. During those two years, managed futures funds overall eked out gains of just 1.7% and 3.5%, according to research firm BarclayHedge, compared with 10.7% and 12.4% for hedge funds.

Don't break the buck continued

Following up on my last post on this matter,I received a new notice from my money market mutual fund manager that it was going to extend its participation in the Treasury's Temporary Guarantee Program until April 30, 2009 (the date to which the Treasury extended the availability of the Program). I would bet that as the Treasury keeps extending availability, my fund will keep extending its participation, and I'll get to keep paying for the 'privilege'.

Small businesses cut back on 401(k) matching contributions

Some small businesses are suspending their 401(k) matches (free WSJ Digg link). This is an unfortunate and disturbing trend. A 401(k) is an extremely important benefit to employees, as seen in these numbers:

A 2007 survey of small businesses by Fidelity Investments found the plans were very important to workers. Almost 70% of the employees said a retirement plan "was critical or very important for businesses to attract and retain employees." The study also found that 49% of employees who had retirement plans said they wouldn't move to companies without them.

I can relate to this. My first real job was with a big company with good benefits. I left it to go to a small company, and the small company's retirement plan was an important consideration. The match at the small company wasn't nearly as good (but the job was much more interesting, so I ended up taking it).

I was especially surprised to learn that only 15-20% of small businesses offer 401(k) plans. I'd like to know the definition of 'small business' used in the survey. Every company under 100 people I've worked for has offered a 401(k) plan.

College endowments predicted to take a big hit

It looks like college endowments, with their bets in alternative assets, aren't escaping bear market that has dealt a hurting to the rest of us. This fact probably doesn't come as a surprise to anyone, but until recently these endowments have seemed invincible, racking up returns that were the envy of everyone. Barron's made some projections on the endowment's losses.

With cash-strapped endowments and other institutional investors looking to sell some of their private-equity funds, an informal secondary market is developing. The going rate is said to be about 50% of stated investment values.

Commodities -- another favored asset class -- have plummeted more than 40% since June 30, with publicly traded oil-and-gas stocks off 50%. Real-estate investment trusts are down 35%. (The S&P 500 is off 28% in that span.)

Contrast this with some endowment's returns over the last decade (these returns are up through June 30.

Harvard's endowment was up an average of 13.8% annually, bringing it to $36.9 billion as of June 30, tops in the academic world. Yale's endowment grew at an average annual pace of 16.3% in the same span, to $22.9 billion, making it second to Harvard in size. Princeton's endowment rose at a 14.9% annual clip, to $16.4 billion. Stanford, in Palo Alto, Calif., also has shined; its endowment rose by 14.2% a year, to $20.4 billion.

The turnaround is staggering. Not entirely unexpected in this market, to be sure, but it goes to show you that even the very best money managers are feeling extraordinary pain.

Don't break the buck

I recently received an update to the prospectus to a money market mutual fund I own explaining that the fund would be participating in the U.S. Treasury's Temporary Guarantee Program for Money Market Funds. The Treasury is guaranteeing (subject to some fine print, naturally) that if a money market fund breaks the buck (has a net asset value of under $1 per share) and liquidates, investors in that fund will get the full $1 per share value. The big caveat is this only applies to shares the investor held as of September 19, 2009. If an investor adds shares after that date, then the new shares would not be covered and therefore subject to loss. The program runs until December 18, 2009, but can be extended by the Treasury to September 18, 2009. The Treasury published a list of FAQs on the program too.

The program isn't free

For this protection, my fund will have to pay %0.015 of its net asset value (NAV). This cost will be borne by the fund, not the management company. Yeah, that's a great deal for investors. We have to pay for the insurance on so-called "safe" money market funds that are turning out to be crappy. How about the management companies step up and pay the insurance?

Update:
The guarantee program was extended until April 30, 2009.

Emerging market returns down; shift to frontier markets?

BusinessWeek (using Bloomberg Financial Markets data) has documented some poor returns over the last year for some emerging markets (link to the infographic). Mexico is down 6%, Peru down 42%, Argentina down 17%, Russia down 8%, ... (South Africa is up 2%). Now they're talking about a shift to frontier markets, and list some ETFs that invest in the frontier markets, some of which I've written about before.

Frontier funds coverage heating up

Frontier funds are in the news again, this time being covered by Money magazine (see my previous posts on the topic here and here.

Enter the newest fad: frontier funds. They go to places that may have barely functioning stock markets and shaky governments but often have astounding growth rates. Côte d'Ivoire's market spiked 122% in 2007. Namibia's rose 63%.

Within the past year, three funds specializing in frontier stocks have launched: T. Rowe Price Africa & Middle East, Fidelity Emerging Europe, Middle East, Africa and Claymore/BNY Mellon Frontier Markets, an ETF. And more are on the drawing board.

The T. Rowe Price fund and the Claymore/BNY fund were in some previous articles I cited in my old posts. The Money story goes on to point out some rather big risks in investing in frontier markets, and questions whether the individual investor has the stomach for the 50% swings that can happen in these markets.

The emerging markets are still tiny, with only a $191 billion market cap according to the story, so they have a lot of room to grow. But now that the mainstream media is covering these markets more and more, is it really the right time to invest, or is it a sucker's bet now?

Insider take on hedge funds and separately managed accounts

Think that the "2 and 20" (or is it "20 and 2") fees charged by hedge funds are outrageous. An investment advisor agrees. It's refreshing to hear a professional give an inside scoop on high priced investment vehicles. The column talks about both hedge funds and separately managed accounts:

To be sure, some brilliant hedge-fund managers have delivered fabulous results. But the odds of getting into one of their funds without being extremely well connected on Wall Street are slim. What you're likely to be sold instead is a hedge fund run by a one-time mutual fund manager who decided to reach for the gold ring.

My strong advice: Stay away.

Separately managed accounts are a different animal. In an SMA, you actually own individual securities (stocks and bonds) rather than shares of a mutual fund -- which are, after all, for the riffraff.

But guess what? The people who run your SMA often work for a mutual fund company. In fact, there's a good chance they run a mutual fund that is similar, if not nearly identical, to your SMA.

He goes on to recommend the CGM Focus mutual fund. I've read many great things about this mutual fund. A story this year in Fortune gives some excellent background on Ken Heebner, the fund's manager.

When will the market bottom get here?

When will the market bottom? Some ascribe to the theory it will happen when we have capitulation. A Barron's column says capitulation is coming.

Ahead of that one giant, desperate cry of uncle yet to come, the bear so far appears to be twisting investors, sector by sector, asset class by asset, until the white flag goes up. Slowly but surely, each of the major asset classes, for example, has found itself down from highs: real estate, stocks, bonds, commodities and the dollar.

Bear markets eventually get to all equity sectors, notes Mike O'Rourke, chief market strategist at broker BTIG. After housing, retail, financials -- and energy last week -- have been hit, technology might be next for a further mauling, given the poor trading action and recent disappointing news out of Apple, Google and Microsoft , he says.

The good news is the process is unfolding. The bad news is that there are plenty of stock groups not nearly as beaten-up as the ones mentioned above, and even a few that are up since the market hit a high last fall. Eventually, the bear will get to most, if not all, and investors will collectively cry "uncle!"

I hope the bottom comes this year and not next (or even 2010). I'm continuing to methodically put money into stocks. Not as much money as I used to put in since I want to hold more cash, but I still put money in so that when the bottom comes I catch it with some money invested.

Desert land as an investment

Land is being snapped up in the Southwest by companies to use for solar power projects. It's becoming a modern day gold rush, with the likes of Chevron, PG&E and Goldman Sachs involved.

Just 20 months ago only five applications for solar sites had been filed with the BLM in the California Mojave. Today 104 claims have been received for nearly a million acres of land, representing a theoretical 60 gigawatts of electricity. (The entire state of California currently consumes 33 gigawatts annually.)

The BLM is the Bureau of Land Management, in charge of the federal-land the solar developers want. 60 gigawatts would be a nice addition to the nation's power supply. I'm not sure exactly how to play a solar investment quite yet, but I'd like to get into the right one. If Goldman Sachs is in this, there is big money to be made. Examples of the increase in land prices are:

Such is the land frenzy that farmers in Arizona were paid $45 million for 1,920 acres by Spanish solar company Abengoa so that it could build a 280-megawatt power plant; the land had an assessed value of a few hundred thousand dollars. The company also plunked down $30 million for 3,000 acres in the California Mojave that had traded hands for $1.25 million nine years earlier. That prompted developer Scott Martin to put his adjacent 300-acre parcel - land he had bought only a few months earlier for $457,500 - on the market for $3 million.

For the more technically inclined, the story discusses what will be built on the land.

Most of the power production contemplated for the Mojave will rely on solar thermal technology - the common approach in large-scale generation projects - in which arrays of mirrors heat liquids to produce steam that drives electricity-generating turbines. But a secretive Hayward, Calif., startup called OptiSolar has filed claims on 105,300 acres to build nine gigawatts' worth of photovoltaic power plants, which employ solar panels similar to those found on residential rooftops. (The company also has applied for leases on 21,800 acres in Arizona and Nevada.) To put those ambitions in context, the biggest photovoltaic power plant operating today produces 15 megawatts. Says OptiSolar executive vice president Phil Rettger: "We have a proprietary technology and a business approach that we're convinced will let us deploy PV at large scale and be competitive with other forms of renewable energy."